Spain - Legal Draft

Double Taxation

Avoidance AgreementIncome-tax Act, 1961:

Notification under section 90: Convention between the Government of the

Republic of India and the Kingdom of Spain for the avoidance of double taxation

and prevention of fiscal evasion with respect to taxes on income and on capitalNotification

No.G.S.R.356(E),dtd.21.4.1995Whereas

the annexed Convention between the Government of the Republic of India and the

Kingdom of Spain for the avoidance of double taxation and the prevention of

fiscal evasion with respect to taxes on income and on capital has entered into

force on 12th January, 1995 after the exchange of Instruments of Ratification

as required by paragraph 2 of Article 30 of the said Convention;Now,

therefore, in exercise of the powers conferred by section 90 of the Income-tax

Act, 1961 (43 of 1961), the Central Government hereby directs that all the

provisions of the said Convention shall be given effect to in the Union of

India.CONVENTION

BETWEEN THE REPUBLIC OF INDIA AND THE KINGDOM OF SPAIN FOR THE AVOIDANCE OF

DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON

INCOME AND ON CAPITALThe

Government of the Republic of India and the Government of the Kingdom of Spain

desiring to conclude a Convention for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital

have agreed as follows:Article

1PERSONAL

SCOPEThis

Convention shall apply to persons who are residents of one or both of the

Contracting States.Article

2TAXES

COVERED1. This Convention shall

apply to taxes on income and on capital imposed on behalf of a Contracting

State irrespective of the manner in which they are levied.2. There shall be

regarded as taxes on income and on capital all taxes imposed on total income,

on total capital, or on elements of income or of capital, including taxes on

gains from the alienation of movable or immovable property, taxes on the total

amounts of wages or salaries paid by enterprises, as well as taxes on capital

appreciation.3. The existing taxes to

which the Convention shall apply are in particular:a. In Spain:i.

The

Income-tax on Individuals (el Impuesto sobre la Renta de las Personas Fisicas);ii.

The

Corporation Tax (el Impuesto sobre Sociedades);iii.

The

Capital Tax (el Impuesto sobre el Patrimonio);(hereinafter

referred to as "Spanish Tax").a.b. In India:i.

The

income tax including any surcharge thereon;ii.

The

surtax; and,iii.

The

wealth-tax(hereinafter

referred to as 'Indian tax").4.

This Convention shall also apply to any identical or substantially similar

taxes which are imposed after the date of signature of this Convention in

addition to, or in place of, the existing taxes. The competent authorities of

the Contracting States shall notify to each other any significant changes which

have been made in their respective taxation laws.Article

3GENERAL

DEFINITIONS1. In this Convention,

unless the context otherwise requires:a. the term " Spain

" means the territory of Spain and includes the territorial sea and

airspace above it. It also includes any other maritime zone in which Spain has

sovereign rights, other rights and jurisdiction, according to the Spanish law

and in accordance with international law;b. the term

"India" means the territory of India and includes the territorial sea

and airspace above it. It also includes any other maritime zone in which India

has sovereign rights, other rights and jurisdictions, according to the Indian

Law and in accordance with international law;c. the terms " a

Contracting State " and " the other Contracting State " mean

Spain or India as the context requires;d. the term " tax

" means " Indian tax " or " Spanish tax ", as the

context requires;e. the term "

person " includes an individual, a company, any other body of persons or

any other entity which is treated as a taxable unit under the taxation laws in

force in the respective Contracting State;f. the term "

company " means any body corporate or any entity which is treated as a

company or body corporate under the taxation laws in force in the respective Contracting

State;g. the terms "

enterprise of a Contracting State " and " enterprise of the other

Contracting State " mean, respectively, an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State;h. the term "

national " means:i.

any

individual possessing the nationality of a Contracting State;ii.

any

legal person, partnership and association deriving its status as such from the

law in force in a Contracting State;a.b.c.d.e.f.g.h.i. the term "

international traffic " means any transport by a ship or aircraft operated

by an enterprise of a Contracting State except when the ship or air-craft is

operated solely between places in the other Contracting State;j. the term "

competent authority " means:i.

in

the case of Spain, the Minister of Economy and Finance or his authorized

representative;ii.

in

the case of India, the Central Government in the Ministry of Finance

(Department of Revenue) or its authorised representative.1.2. In the application of

this Convention by a Contracting State, any term not defined therein shall,

unless the context otherwise requires, have the meaning which it has under the

law of that Contracting State relating to the taxes which are the subject of

this Convention.Article

4RESIDENT1. For the purposes of

this Convention, the term " resident of a Contracting State " means

any person who, under the laws of that State, is liable to taxation therein by

reason of his domicile, residence, place of management or any other criterion

of similar nature. But this term does not include any person who is liable to

tax in that State in respect only of income from sources in that State, or

capital situated therein.2. Where by reason of

the provisions of paragraph 1 an individual is a resident of both Contracting

States, then his status shall be determined in accordance with the following

rules:a. He shall be deemed to

be a resident of the Contracting State in which he has a permanent home

available to him. If he has a permanent home available to him in both

Contracting States, he shall be deemed to be a resident of the Contracting

State with which his personal and economic relations arc closer (centre of

vital interests.)b. If the Contracting

State in which he has his centre of vital interests cannot be determined, or if

he has not a permanent home available to him in either Contracting State, he

shall be deemed to be a resident of the Contracting State in which he has an

habitual abode.c. If he has an habitual

abode in bath Contracting States or in neither of them, he shall be deemed to

be a resident of the Contracting State of which he is a national.d. If he is a national

of both Contracting States or of neither of them the competent authorities of

the Contracting States shall settle the question by mutual agreement.1.2.3. Where by reason of

the provisions of paragraph 1 a person other than an individual is a resident

of both Contracting States, then it shall be deemed to be a resident of the

Contracting State in which its place of effective management is situated.Article

5PERMANENT

ESTABLISHMENT1. For the purposes of

this convention, the term " permanent establishment " means a fixed

place of business through which the business of an enterprise is wholly or

partly carried on.2. The term "

permanent establishment " includes especially:a. a place of

management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;g. a warehouse in

relation to a person providing storage facilities for others;h. a farm, plantation or

other place where agriculture, forestry, plantation or related activities are

carried on;i. a premises used as a

sales outlet;j. an installation or

structure used for the exploration or exploitation of natural resources, but

only if so used for a period of more than three months;k. a building site or

construction, installation or assembly project or supervisory activities in

connection therewith, where such site, project or activities (together with

other such sites, projects or activities, if any) continue for a period of more

than six months in any twelve month period, or where such project or

supervisory activity, being incidental to the sale of machinery or equipment,

continues for a period not exceeding six months and the charges payable for the

project supervisory activity exceed 10 percent of the sale price of the

machinery and equipment:Provided

that, for the purpose of this paragraph an enterprise shall be deemed to have a

permanent establishment in a Contracting State and to carry on business through

that permanent establishment if it provides services or facilities in

connection with or supplies plant and machinery on hire used or to be used in,

the prospecting for, or extraction or production of mineral oils in the State

if the activities continue for a period of more than thirty days in any twelve

month period.1.2.3. Notwithstanding the

preceding provisions of this Article, the term " permanent establishment

" shall be deemed not to include:a. the use of facilities

solely for the purpose of storage or display of goods or merchandise belonging

to the enterprise;b. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of storage or display;c. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of processing by another enterprise;d. the maintenance of a

fixed place of business solely for the purpose of purchasing goods and

merchandise, or of collecting information for the enterprise;e. the maintenance of a

fixed place of business solely for the purpose of advertising, for supply of

information, for scientific research or for similar activities which have a

preparatory or auxiliary character, for the enterprise.1.2.3.4. Notwithstanding the

provisions of paragraphs 1 and 2, where a person--other than an agent of an

independent status to whom paragraph 5 applies--is acting in a Contracting

State on behalf of an enterprise of the other Contracting State that enterprise

shall be deemed to have a permanent establishment in the first-mentioned State,

ifa. he has and habitually

exercises in that State an authority to conclude contracts on behalf of the

enterprise, unless his activities are limited to the purchase of goods or

merchandise for the enterprise;b. he has no such

authority, but habitually maintains in the first mentioned State a stock of

goods or merchandise from which he regularly delivers goods or merchandise on

behalf of the enterprise.1.2.3.4.5. An enterprise of a

Contracting State shall not be deemed to have a permanent establishment in the

other Contracting State merely because it carries on business in that other

State though a broker, general Commission agent or any other agent of an

independent status, provided that such persons are acting in the ordinary

course of their business. However, when the activities of such an agent are

devoted wholly or almost wholly on behalf of that enterprise itself or on

behalf of that enterprise and other enterprises controlling, controlled by, or

subject to the same common control, as that enterprise, he will not be

considered an agent of an independent status within the meaning of this

paragraph.6. The fact that a

company which is a resident of a Contracting State controls or is controlled by

a company which is a resident of the other Contracting State, or which carries

on business in that other State (whether through a permanent establishment or

otherwise), shall not of itself constitute either company a permanent

establishment of the other.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

resident of a Contracting State from immovable property (including income from

agriculture or forestry) situated in the other Contracting State may be taxed

in that other State.2. The term "

immovable property " shall have the meaning which it has under the law of

the Contracting State in which the property in question is situated. The term

shall in any case include property accessory to immovable property usufruct of

immovable property and rights to variable or fixed payments as consideration

for the working of, or the right to work, mineral deposits, sources and other

natural resources. Ships, boats and aircraft shall not be regarded as immovable

property.3. The provisions of

paragraph 1 shall also apply to income derived from the direct use, letting or

use in any other form of immovable property.4. The provisions of

paragraphs 1 and 3 shall also apply to the income from immovable property of an

enterprise and to income from immovable property used for the performance or

independent personal services.Article

7BUSINESS

PROFITS1. The profits of an

enterprise of a Contracting State shall be taxable only in that State unless

the enterprise carries on business in the other Contracting State through a

permanent establishment situated therein. If the enterprise carries on business

as aforesaid, the profits of the enterprise may be taxed in the other State but

only so much of them as is attributable to (a) that permanent establishment;

(b) sales in that other State of goods or merchandise of the same or similar

kind as those sold through that permanent establishment; or (c) other business

activities carried on in that other State of the same or similar kind as those

effected through that permanent establishment.2. Subject to the

provisions of paragraph 3, where an enterprise of a Contracting State carries

on business in the other Contracting State through a permanent establishment

situated therein, there shall in each Contracting State be attributed to that

permanent establishment the profits which it might be expected to make if it

were a distinct and separate enterprise engaged in the same or similar

activities under the same or similar conditions and dealing wholly

independently with the enterprise of which it is a permanent establishment.3. In the determination

of the profits of a permanent establishment, there shall be allowed as

deductions expenses which are incurred for the purposes of the permanent

establishment, including executive and general administrative expenses,

research and development expenses, interest and other similar expenses so

incurred, whether in the State in which the permanent establishment is situated

or elsewhere, in accordance with the provisions of and subject to the

limitations of the taxation laws of that State. However, no such deduction

shall be allowed in respect of amounts, if any, paid (otherwise than towards

reimbursement of actual expenses) by the permanent establishment to the head

office of the enterprise or any of its other offices, by way of royalties, fees

or other similar payments in return for the use of patents, know-how or other

rights, or by way of commission or other charges, for specific services

performed or for management, or, except in the case of a banking enterprise, by

way of interest on moneys lent to the permanent establishment. Likewise, no

account shall be taken, in the determination of the profits of a permanent

establishment, for amounts charged (otherwise than towards reimbursement of

actual expenses), by the permanent establishment to the head office of the

enterprise or any of its other Offices, by way of royalties, fees or other

similar payments in return for the use of patents, know-how or other rights, or

by way of commission or other charges for specific services performed, or for

management, or, except in the case of a banking enterprise, by way of interest

on moneys lent to the head office of the enterprise or any of its other

offices.4. No profits shall be

attributed to a permanent establishment by reason of the mere purchase by that

permanent establishment of goods or merchandise for the enterprise.5. For the purposes of

the preceding paragraphs, the profits to be attributed to the permanent

establishment shall be determined by the same method year by year unless there

is good and sufficient reason to the contrary.6. Where profits include

items of income which are dealt with separately in other Articles of this

Convention, then the provisions of those Articles shall not be affected by the

provisions of this Article.Article

8AIR

TRANSPORT1. Profits derived by an

enterprise of a Contracting State from the operation of aircraft in

international traffic shall be taxable only in that State.2. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency.3. The term "

operation of aircraft " shall mean business of transportation by air of

passengers, mail, livestock or goods carried on by the owners or lessees or

charterers of aircraft, including the sale of tickets for such transportation

on behalf of other enterprises, the incidental lease of aircraft and any other

activity directly connected with such transportation.Article

9SHIPPING1. Profits derived by an

enterprise of a Contracting State from the operation of ships in international

traffic shall be taxable only in that State.2. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency engaged in the operation of

ships.3. For the purposes of

this Article, profits derived from the operation of ships include profits from

the use, maintenance or rental of containers (including trailers and related

equipment for the transport of containers) in connection with the transport of

goods or merchandise in international traffic.Article

10ASSOCIATED

ENTERPRISESWhere,a. an enterprise of a

Contracting State participates directly or indirectly in the management,

control or capital of an enterprise of the other Contracting State, orb. the same persons

participate, directly or indirectly in the management, control or capital of an

enterprise of a Contracting State and an enterprise of the other Contracting

State,and

in either case conditions are made or imposed between the two enterprises in

their commercial or financial relations which differ from those which would be

made between independent enterprises, then any profits which would, but for

those conditions, have accrued to one of the enterprises but, by reason of

those conditions, have not so accrued, may be included in the profits of that

enterprise and taxed accordingly.Article

1. DIVIDENDS1. Dividends paid by a

company which is a resident of a contracting state to a resident of the other

Contracting State may be taxed in that other State.2. However, such

dividends may also be taxed in the Contracting State of which the company

paying the dividends is a resident and according to the laws of that State, but

if the recipient is the beneficial owner of the dividends the tax so charged

shall not exceed 15 per cent. of the gross amount of the dividends.This

paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.1.2.3. The term

"dividends" as used in this Article means income from shares or other

rights, not being debt-claims, participating in profits, as well as income from

other corporate rights which is subjected to the same taxation treatment as

income from shares by the laws of the State of which the company making the distribution

is a resident.4. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,

being a resident of a Contracting State, carries on business in the other

Contracting State of which the company paying the dividends is a resident,

through a permanent establishment situated therein, or performs in that other

State independent personal services from a fixed base situated therein, and the

holding in respect of which the dividends are paid is effectively connected

with such permanent establishment or fixed base. In such case the provisions of

Article 7 or Article 15, as the case may be, shall apply.5. Where a company which

is a resident of a Contracting State derives profits or income from the other

Contracting State, that other State may not impose any tax on the dividends

paid by the company except insofar as such dividends are paid to a resident of

that other State or insofar as the holding in respect of which the dividends

are paid is effectively connected with a permanent establishment or a fixed

base situated in that other State, nor subject the company's undistributed

profits to a tax on the company's undistributed profits, even if the dividends

paid or the undistributed profits consist wholly or partly of profits or income

arising in such other State.Article

12INTEREST1. Interest arising in a

Contracting State and paid to a resident of the other Contracting State may be

taxed in that other State.2. However, such

interest max, also be taxed in the Contracting State in which it arises and

according to the laws of that State, but if the recipient is the beneficial

owner of the interest the tax so charged shall not exceed 15 per cent. of the

gross amount of the interest.3. Notwithstanding the

provisions of paragraph 2:a. interest arising in a

Contracting State shall be exempt from tax in that State provided it is derived

and beneficially owned by:i.

the

Government, a political sub-division or a local authority, of the other

Contracting State; orii.

the

Central Bank of the other Contracting State;a.b. interest arising in a

Contracting State shall be exempt from tax in that Contracting State to the

extent approved by the Government of that State if it is derived and

beneficially owned by any person (other than a person referred to in sub-paragraph

(a)) who is a resident of the other Contracting State provided that the

transaction giving rise to the debt-claim has been approved in this regard by

the Government of the first-mentioned Contracting State.1.2.3.4. The term "

interest " as used in this Article means income from debtclaims of every

kind, whether or not secured by mortgage and whether or not carrying a right to

participate in the debtor's profits, and in particular, income from Government

securities and income from bonds or debentures, including premiums and prizes

attaching to such securities, bonds or debentures. Penalty charges for late

payment shall not be regarded as interest for the purpose of this Article.5. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,

being a resident of a Contracting State, carries on business in the other

Contracting State in which the interest arises, through a permanent

establishment situated therein, or performs in that other State independent

personal services from a fixed base situated therein, and the debt-claim in

respect of which the interest is paid is effectively connected with such

permanent establishment or fixed base. In such case the provisions of Article 7

or Article 15, as the case may be, shall apply.6. Interest shall be

deemed to arise in a Contracting State when the payer is that State itself, a

political sub-division, a local authority or a resident of that State. Where,

however, the person paying the interest, whether he is a resident of a Contracting

State or not, has in a Contracting State a permanent establishment or a fixed

base in connection with which the indebtedness on which the interest is paid

was incurred, and such interest is borne by such permanent establishment or

fixed base, then such interest shall be deemed to arise in the Contracting

State in which the permanent establishment or fixed base is situated.7. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the interest, having regard to the

debt-claim for which it is paid, exceeds the amount which would have been

agreed upon by the payer and the beneficial owner in the absence of such

relationship, the provisions of this Article shall apply only to the

last-mentioned amount. In such case, the excess part of the payments shall

remain taxable according to the laws of each Contracting State, due regard

being had to the other provisions of this Convention.Article

13ROYALTIES

AND FEES FOR TECHNICAL SERVICES1. Royalties and fees

for technical services arising in a Contracting State and paid to a resident of

the other Contracting State may be taxed in that other State.2. However, such

royalties and fees for technical services may also be taxed in the Contracting

State in which they arise and according to the law of that State, but if the

recipient is the beneficial owner of the royalties or fees for technical

services the tax so charged shall not exceed:i.

in

the case of royalties relating to the payments for the use of, or the right to

use, industrial, commercial or scientific equipment, 10 per cent. of the gross

amount of the royalties;ii.

in

the case of fees for technical services and other royalties, 20 per cent. of

the gross amount of fees for technical services or royalties.1.2.3. The term "

royalties " as used in this Article means payments of any kind received as

a consideration for the use of, or the right to use, any copyright of literary,

artistic or scientific work, including cinematographic films or films or tapes

used for radio or television broadcasting, any patent, trade mark, design or

model, plan, secret formula or process, or for the use of, or the right to use,

industrial, commercial or scientific equipment, or for information concerning

industrial, commercial or scientific experience.4. The term " fees

for technical services " as used in this Article means payments of any

kind to any person other than payments to an employee of the person making the

payments and to any individual for independent personal services mentioned in Article

15 (Independent Personal Services), in consideration for the services of a

technical or consultancy nature, including the provision of services of

technical or other personnel.5. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or

fees for technical services, being a resident of a Contracting State, carries

on business in the other Contracting State in which the royalties or fees for

technical services arise, through a permanent establishment situated therein,

or performs in that other State independent personal services from a fixed base

situated therein, and the right, property or contract in respect of which the

royalties or fees for technical services are paid is effectively connected with

such permanent establishment or fixed base. In such case, the provisions of

Article 7 or Article 15, as the case may be, shall apply.6. Royalties and fees

for technical services shall be deemed to arise in a Contracting State when the

payer is that State itself, a political sub-division, a local authority or a

resident of that State. Where, however, the person paying the royalties or fees

for technical services whether he is a resident of a Contracting State or not,

has in a Contracting State a permanent establishment or fixed base in

connection with which the liability to pay the royalties or fees for technical

services was incurred, and such royalties or fees for technical services are

borne by such permanent establishment or fixed base, then such royalties or

fees for technical services shall be deemed to arise in the State in which the

permanent establishment or fixed base is situated.7. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the royalties or fees for

technical services paid, exceeds the amount which would have been paid in the

absence of such relationship, the provisions of this Article shall apply only

to the last-mentioned amount. In such case, the excess part of the payments

shall remain taxable according to the laws of each Contracting State, due

regard being had to the other provisions of this Convention.Article

14CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property, referred

to in Article 6, and situated in the other Contracting State may be taxed in

that other State.2. Gains from the

alienation of movable property forming part of the business property of a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State or of movable property pertaining to a fixed base

available to a resident of a Contracting State in the other Contracting State

for the purpose of performing independent personal services, including such

gains from the alienation of such a permanent establishment (alone or together

with the whole enterprise) or of such fixed base, may be taxed in that other

State.3. Gains from the

alienation of ships or aircraft operated in international traffic or of movable

property pertaining to the operation of such ships or aircraft shall be taxable

only in the Contracting State of which the alienator is a resident.4. Gains from the

alienation of shares of the capital stock of a company the property of which

consists, directly or indirectly, principally of immovable property situated in

a Contracting State may be taxed in that State.5. Gains from the

alienation of shares of the capital stock of a company forming part of a

participation of at least 10 per cent in a company which is a resident of a

Contracting State may be taxed in that Contracting State.6. Gains from the

alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4

and 5 shall be taxable only in the Contracting State of which the alienator is

a resident.Article

15INDEPENDENT

PERSONAL SERVICES1. Income derived by a

resident of a Contracting State from the performance of professional services

or other independent activities of a similar character shall be taxable only in

that State except in the following circumstances when such income may also be

taxed in the other Contracting State:a. if he has a fixed

base regularly available to him in the other Contracting State for the purpose

of performing his activities; in that case, only so much of the income as is

attributable to that fixed base may be taxed in that other State; orb. if his stay in the

other Contracting State is for a period or periods amounting to or exceeding in

the aggregate 183 days in the relevant " taxable year "; in that

case, only so much of the income as is derived from his activities performed in

that other State may be taxed in that other State.1.2. The term "

professional services " includes independent scientific, literary,

artistic, educational or teaching activities, as well as the independent activities

of physicians, surgeons, lawyers, engineers, architects, dentists and

accountants.Article

16DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 17, 18, 19, 20, 21 and 22, salaries, wages and other

similar remuneration derived by a resident of a Contracting State in respect of

an employment shall be taxable only in that State unless the employment is

exercised in the other Contracting State. If the employment is so exercised,

such remuneration as is derived therefrom may be taxed in that other State.2. Notwithstanding the

provisions of paragraph 1, remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other Contracting State

shall be taxable only in the first-mentioned State if:a. the recipient is

present in the other State for a period or periods not exceeding in the

aggregate 183 days in the relevant " taxable year ", andb. the remuneration is

paid by, or on behalf of, an employer who is not a resident of the other State;

andc. the remuneration is

not borne by a permanent establishment or a fixed base which the employer has

in the other State.1.2.3. Notwithstanding the

preceding provisions of this Article, remuneration derived in respect of an

employment exercised aboard a ship or aircraft operated in international

traffic, by an enterprise of a Contracting State may be taxed in that State.Article

17DIRECTORS'

FEESDirectors'

fees and similar payments derived by a resident of a Contracting State in his

capacity as a member of the board of directors of a company which is a resident

of the other Contracting State may be taxed in that other State.Article

18ARTISTES

AND ATHLETES1. Notwithstanding the

provisions of Articles 15 and 16, income derived by a resident of a Contracting

State as an entertainer, such as theatre, motion picture, radio or television

artist, or a musician, or as an athlete, from his personal activities as such

exercised in the other Contracting State, may be taxed in that other State.2. Where income in

respect of personal activities exercised by an entertainer or an athlete in his

capacity as such accrues not to the entertainer or athlete himself but to

another person, that income may, notwithstanding the provisions of Articles 7,

15 and 16, be taxed in the Contracting State in which the activities of the

entertainer or athlete are exercised.3. Notwithstanding the

provisions of paragraphs 1 and 2, income derived by an entertainer or an

athlete who is a resident of a Contracting State from his personal activities

as such exercised in the other Contracting State, shall be taxable only in the

first-mentioned Contracting State, if the activities in the other Contracting

State are supported wholly or substantially from the public funds of the

first-mentioned Contracting State, including any of its political sub-divisions

or local authorities.Article

19PENSIONSSubject

to the provisions of paragraph 2 of Article 20, pensions and other similar

remuneration paid to a resident of a Contracting State in consideration of past

employment shall be taxable only in that State.Article

20REMUNERATION

AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.a. Remuneration, other

than a pension, paid by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that State or sub-division or authority shall be taxable only in that State.b. However, such

remuneration shall be taxable only in the other Contracting State if the

services are rendered in that other State and the individual is a resident of

that State who:i.

is

a national of that State; orii.

did

not become a resident of that State solely for the purpose of rendering the

services.1.2.a. Any pension paid by,

or out of funds created by, a Contracting State or a political sub-division or

a local authority thereof to an individual in respect of services rendered to

that State or sub-division or authority shall be taxable only in that State.b. However, such pension

shall be taxable only in the other Contracting State if the individual is a

resident of, and a national of, that other State.1.2.3. The provisions of

Articles 16,17 and 19 shall apply to remuneration and pensions in respect of

services rendered in connection with a business carried on by a Contracting

State or a political sub-division or a local authority thereof.Article

21STUDENTSPayments

which a student or business apprentice who is or was immediately before

visiting a Contracting State a resident of the other Contracting State and who

is present in the first-mentioned State solely for the purpose of his education

or training receives for the purpose of his maintenance, education or training

shall not be taxed in that State, provided that such payments arise from

sources outside that State.Article

22PAYMENTS

RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. A professor or

teacher who is or was a resident of one of the Contracting States immediately

before visiting the other Contracting State for the purpose of teaching or

engaging in research, or both, at an officially recognised university, college,

school or other institution in that other Contracting State shall be exempt

from tax in that other State on any remuneration for such teaching or research

for a period not exceeding two years from the date of his arrival in that other

State.2. This Article shall

not apply to income from research if such research is undertaken not in the

general interest but primarily for the private benefit of a specific person or

persons.Article

23OTHER

INCOME1. Subject to the

provisions of paragraph 2, items of income of a resident of a Contracting

State, wherever arising, which are not expressly dealt with in the foregoing

Articles of this Convention, shall be taxable only in that Contracting State.2. The provisions of

paragraph 1 shall not apply to income, other than income from immovable

property as defined in paragraph 2 of Article 6, if the recipient of such

income, being a resident of a Contracting State carries on business in the

other Contracting State through a permanent establishment situated therein, or

performs in that other State independent personal services from a fixed base

situated therein, and the right or property in respect of which the income is

paid is effectively connected with such permanent establishment, or fixed base.

In such a case, the provisions of Article 7 or Article 15, as the case may be,

shall apply.3. Notwithstanding the

provisions of paragraphs 1 and 2, items of income of a resident of a

Contracting State not dealt with in the foregoing Articles of this Convention,

and arising in the other Contracting State may be taxed in that other State.Article

24CAPITAL1. Capital represented

by immovable property referred to in Article 6, owned by a resident of a

Contracting State and situated in the other Contracting State, may be taxed in

that other State.2. Capital represented

by movable property forming part of the business property of a permanent

establishment which an enterprise of a Contracting State has in the other

Contracting State or by movable property pertaining to a fixed base available

to a resident of a Contracting State in the other Contracting State for the

purpose of performing independent personal services, may be taxed in that other

State.3. Capital represented

by ships or aircraft, operated in international traffic or by movable property

pertaining to the operation of such ships or aircraft shall be taxable only in

the Contracting State of which the enterprise operating such ships, aircraft or

property is a resident.4. Capital represented

by shares of the capital stock of a company the property of which consists,

directly or indirectly, principally of immovable property situated in

Contracting State may be taxed in that State.5. Capital represented

by shares of the capital stock of a company which is a resident of a

Contracting State representing a participation of at least 10 per cent in the

capital stock of that company may be taxed in that Contracting State.6. All other elements of

capital of a resident of a Contracting State shall be taxable only in that

Contracting State.Article

25ELIMINATION

OF DOUBLE TAXATION1. The laws in force in

either of the Contracting States will continue to govern the taxation of income

and capital in the respective Contracting States except where express

provisions to the contrary are made in this Convention.2. In India, double

taxation will be avoided in the following manner:a. Where a resident of

India derives income or owns capital which, in accordance with the provisions

of this Convention, may be taxed in Spain, India shall allow:i.

as

a deduction from the tax on the income of that resident, an amount equal to the

income-tax paid in Spain, whether directly or by deduction; andii.

as

a deduction from the tax on the capital of that resident, an amount equal to

the capital tax paid in Spain.Such

deduction in either case shall not, however, exceed that part of the income-tax

or capital tax, as computed before the deduction is given, which is

attributable, as the case may be, to the income or the capital which may be

taxed in Spain.a.b. Where a resident of

India derives income or owns capital which in accordance with the provisions of

this Convention, shall be taxable only in Spain, India may include this income

or capital in the tax base but shall allow as a deduction from the income-tax

or capital tax, that part of the income-tax or capital tax which is

attributable, as the case may be, to the income derived from or the capital

owned in Spain.1.2.3. In Spain, subject to

the provisions of its internal law, double taxation will be avoided in the

following manner:a. Where a resident of

Spain derives income or owns capital which, in accordance with the provisions

of this Convention, may be taxed in India, Spain shall allow:i.

as

a deduction-from the tax on the income of that resident, an amount equal to the

income-tax paid in India;ii.

as

a deduction from the tax on the capital of that resident, an amount equal to

the capital tax paid in India.a.b. In the case of a

dividend paid by a company which is a resident of India to a company which is a

resident of Spain and which holds at least 25 per cent of the capital of the

company paying the dividend, the deduction shall take into account [in addition

to the deduction provided under sub-paragraph (a)] the income-tax paid in India

by the company in respect of the profits out of which such dividend is paid

provided that such tax is taken into account in calculating the base of the

Spanish tax.Such

deduction in either case shall not, however, exceed that part of the income-tax

or capital tax, as computed before the deduction is given, which is

attributable, as the case may be, to the income or the capital which may be

taxed in India.a.b.c. Where in accordance

with any provision of the Convention income derived or capital owned by a

resident of Spain is exempt from tax in Spain, Spain may nevertheless, in

calculating the amount of tax on the remaining income or capital of such

resident, take into account the exempted income or capital.1.2.3.4. For the purposes of

deduction referred to in paragraph 3, the term " income-tax paid in India

" shall be deemed to include any amount which would have been payable as

Indian tax under the laws of India and in accordance with this Convention for

any year but for an exemption from, or reduction of, tax granted for that year

under:i.

Sections

10(4), 10(15)(iv), 10A, 10B, 32A, 32AB, 80HH, 80HHC and 80-I of the Income-tax

Act, 1961 (43 of 1961) so far as they were in force on, and have not been

modified since, the date of the signature of this Convention, or have been

modified only in minor respects so as not to affect their general character; orii.

any

other provision which may be enacted hereafter granting a deduction in

computing the taxable income or an exemption or reduction from tax which the

competent authorities of the Contracting States agree to be of a substantially

similar character if it has not been modified thereafter or has been modified

only in minor respects so as not to affect its general character.1.2.3.4.5. The provisions of

paragraph 4 shall apply for the first 10 years for which this Convention is

effective but the competent authorities of the Contracting States may consult

each other to determine whether this period shall be extended.Article

26NON-DISCRIMINATION1. The nationals of a

Contracting State shall not be subjected in the other Contracting State to any

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances and under the same conditions are or

may be subjected.2. The taxation on a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State shall not be less favourably levied in that other State

than the taxation levied on enterprises of that other State carrying on the

same activities in the same circumstances or under the same conditions.3. Enterprises of a

Contracting State, the capital of which is wholly or partly owned or

controlled, directly or indirectly, by one or more residents of the other

Contracting State, shall not be subjected in the first-mentioned Contracting

State to any taxation or any requirement connected therewith which is other or

more burdensome than the taxation and connected requirements to which other

similar enterprises of that first-mentioned State are or may be subjected.4. Except where the

provisions of Article 10, paragraph 7 of Article 12, or paragraph 7 of Article

13 apply, interest, royalties and other disbursements paid by an enterprise of

a Contracting State to a resident of the other Contracting State shall, for the

purpose of determining the taxable profits of such enterprise, be deductible

under the same conditions as if they had been paid to a resident of the

first-mentioned State. Similarly, any debts of an enterprise of a Contracting

State shall, for the purpose of determining the taxable capital of such

enterprise, be deductible under the same conditions as if they had been

contracted to a resident of the first-mentioned State.Article

27MUTUAL

AGREEMENT PROCEDURE1. Where a resident of a

Contracting State considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with this

Convention, he may, notwithstanding the remedies provided by the national laws

of those States, present his case to the competent authority of the Contracting

State of which he is a resident, or, if his case comes under paragraph 1 of

Article 26, to that of the Contracting State of which he is a national. The

case must be presented within three years from the first notification of the

action resulting in taxation not in accordance with the provisions of the

Convention.2. The competent authority

shall endeavour, if the objection appears to it to be justified and if it is

not itself able to arrive at an appropriate solution, to resolve the case by

mutual agreement with the competent authority of the other Contracting State,

with a view to the avoidance of taxation not in accordance with the Convention.

Any agreement reached shall be implemented notwithstanding any time limits in

the national laws of the Contracting States.3. The competent

authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or

application of the Convention. They may also consult together for the

elimination of double taxation in cases not provided for in the Convention. The

competent authorities shall also, by mutual agreement, develop appropriate

actions, methods and techniques to improve the exchange of information carried

out under Article 28 of this Convention.4. The competent

authorities of the Contracting States may communicate with each other directly

for the purpose of reaching an agreement in the sense of the preceding

paragraphs. When it seems advisable in order to reach agreement to have an oral

exchange of opinions, such exchange may take place through a Commission

consisting of representatives of the competent authorities of the Contracting

States.Article

28EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information

(including copies of documents when relevant) as is necessary for carrying out

the provisions of the Convention or of the domestic laws of the Contracting

States concerning taxes covered by the Convention, insofar as the taxation

thereunder is not contrary to the Convention, in particular for the prevention

of fraud or tax evasion and of tax avoidance. The exchange of information is

not restricted by Article 1. Any information received by a Contracting State

shall be treated as secret in the same manner as information obtained under the

domestic laws of that State. However, if the information is originally regarded

as secret in the transmitting State, it shall be disclosed only to persons or

authorities (including courts and administrative bodies) involved in the

assessment or collection of, the enforcement or prosecution in respect of, or

the determination of appeals in relation to the taxes which are the subject of

the Convention. Such persons or authorities shall use the information only for

such purposes but may disclose the information in public court proceedings or

in judicial decisions.2. In no case shall the

provisions of paragraph 1 be construed so as to impose on a Contracting State

the obligation:a. to carry out

administrative measures at variance with the laws or administrative practice of

that or of the other Contracting State;b. to supply information

which is not obtainable under the laws or in the normal course of the administration

of that or of the other Contracting State;c. to supply information

which would disclose any trade, business, industrial, commercial or

professional secret or trade process or information the disclosure of which

would be contrary to public policy.Article

29DIPLOMATIC

AND CONSULAR OFFICERSNothing

in this Convention shall affect the fiscal privileges of diplomatic agents or

consular officers under the general rules of international law or under the

provisions of special agreements.Article

30ENTRY

INTO FORCE1. This Convention shall

be ratified and the instruments of ratification shall be exchanged at as soon

as possible.2. This Convention shall

enter into force upon the exchange of the instruments of ratification and its

provisions shall have effect:a. In Spain:In

respect of taxes chargeable on income or on capital for any taxable year

beginning on or after the first day of January of the calendar year next

following that in which the Convention enters into force.a.b. In India:i.

in

respect of income arising in any taxable year beginning on or after the first

day of April of the calendar year next following that in which the Convention

enters into force,ii.

in

respect of capital which is held on the last day of any taxable year beginning

on or after the first day of April of the calendar year next following that in

which the Convention enters into force.Article

31TERMINATION1. The Convention shall

remain in force indefinitely, but either of the Contracting States may, on or

before the thirtieth day of June in any calendar year beginning after the

expiration of a period of five years from the date of its entry into force,

give to the other Contracting State through diplomatic channels, written notice

of termination. In such event, the Convention shall cease to have effect:a. in Spain, in respect

of taxes chargeable for any taxable year beginning on or after the first day of

January of the calendar year next following that in which the notice of

termination is given;b. in India, in respect

of income arising in any taxable year beginning on or after the first day of

April of the calendar year next following that in which the notice of

termination is given and in respect of capital which is held on the last day of

any taxable year beginning on or after the first day of April next following

the calendar year in which the notice of termination is given.IN

WITNESS WHEREOF

the undersigned, being duly authorised thereto, have signed the present

convention.Done

in duplicate at New Delhi this 8th day of February, one thousand nine hundred

and ninety three--in the Hindi, Spanish and English languages, all the texts

being equally authentic. In case of divergence between any of the texts, the

English text shall be the operative one.For

the Government of the Republic of IndiaFor

the Government of the Kingdom of Spain,(Sd.)

Manmohan Singh (Sd.) Javier Solana MadariagaMinister

of Finance.Minister

of Foreign Affairs.PROTOCOLAt

the moment of signing the Convention between the Government of the Republic of

India and the Government of the Kingdom of Spain for the Avoidance of Double

Taxation and the Prevention of Fiscal Evasion with respect to taxes on Income

and on Capital, the undersigned have agreed upon the following provisions which

shall be an integral part of the Convention:1. in respect of clause

(d) of paragraph 1 of Article 3 (General Definitions), it is understood that

the term " tax " shall not include any amount which is payable in

respect of any default or omission in relation to the taxes to which this

Convention applies or which represents a penalty imposed relating to those

taxes.2. In respect of clause

(g) of paragraph 2 of Article 5 (Permanent Establishment), it is understood

that this clause refers to a warehouse where space is rented to other persons.3. In respect of cla